LyondellBasell Industries NV (LYB) (Q2 2026) Earnings Call Highlights: EBITDA Triples to $2. ...

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Earnings per Diluted Share: $4.30 in the second quarter. EBITDA: $2.1 billion, more than tripled sequentially. EBITDA Margin: 23%. Cash Balance: $2.6 billion at quarter end. Available Liquidity: $7.1 billion at quarter end. Cash from Operating Activities: $752 million in the second quarter. Capital Investments: $270 million funded in the second quarter. Dividends Returned to Shareholders: $224 million in the second quarter. Olefins & Polyolefins (O&P) Americas EBITDA: $1.3 billion, approximately 4x higher than the same quarter last year. O&P Europe, Asia, and International EBITDA: $331 million, a $337 million increase over the first quarter. Intermediates & Derivatives (I&D) EBITDA: $386 million, increased sequentially. Advanced Polymer Solutions (APS) EBITDA: $78 million in the second quarter. Technology Segment EBITDA: $74 million in the second quarter.

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Release Date: July 31, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

LyondellBasell Industries NV (NYSE:LYB) delivered an impressive 23% EBITDA margin in Q2 2026, with EBITDA of $2.1 billion, more than tripling sequentially. The company completed the divestiture of four European assets and plans to close its Brindisi site, reshaping its portfolio toward more advantaged assets and improving cost position. Strong operational performance in O&P Americas, with EBITDA of $1.3 billion (4x higher year-over-year), driven by record polyethylene price increases and high operating rates (crackers at ~95%). The Bayport PO/TBA asset successfully restarted in June, positioning the company to capture improved market opportunities and full integrated value chain benefits in Q3. The company's cash improvement plan is on track to achieve $500 million in incremental cash flow by end of 2026, with headcount reduced by 17% and SG&A costs declining. Resilient demand across key end markets (packaging, health care, infrastructure) and strong oxyfuel margins due to elevated gasoline crack spreads and feedstock advantages. Portfolio transformation has increased concentration on cost-advantaged feedstocks, with 80% of global ethylene capacity now connected to advantaged feedstocks, supporting higher through-cycle margins.

Negative Points

The Middle East conflict has caused unprecedented supply disruptions, with ~6 million tons of polyethylene capacity damaged and not expected to restart until at least 2027, creating ongoing market volatility. Unplanned downtime at the Bayport PO/TBA asset had an estimated EBITDA impact of approximately $250 million in Q2, reducing overall I&D operating rates to ~65%. Third-quarter operating rates are projected to decline to ~85% in O&P Americas due to planned maintenance at Clinton and Lake Charles facilities, and to ~70% in O&P Europe/Asia due to seasonality and low Rhine water levels. The company faces ongoing challenges from low Rhine water levels in Europe, which could further impact operating rates and logistics. Technology segment EBITDA is expected to moderate in Q3 due to normalized catalyst demand and almost nonexistent new licensing opportunities amid slower global polyolefins capacity growth. Demand in housing and automotive remains subdued, and APS faces higher raw material costs and typical seasonal downturns in automotive OEMs. The company is prioritizing balance sheet rebuilding over M&A, with a focus on maintaining investment-grade credit metrics, which may limit near-term growth opportunities.

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Q & A Highlights

Q: On polyethylene, consultants are calling for a $0.10 decline in July. Do you dispute that forecast, and why? A: Peter Vanacker (CEO) noted that normalization is not a straight line, with the conflict in the Middle East continuing to cause volatility and prices reacting to the ongoing situation. Kimberly Foley (EVP, Global Olefins & Polyolefins) added that July has seen increased export pricing and volumes globally, higher crude prices, and a lack of Chinese exports. She highlighted potential supply constraints from low Rhine water levels and hurricane season, suggesting price settlements could be flat or move up.

Q: Can you update us on the status of MoReTec 1 and your acetyl assets in the United States? A: Peter Vanacker (CEO) stated that MoReTec 1 in Wesseling is progressing as planned with start-up expected towards the end of 2027, and the vast majority of its capacity is already presold. He noted that the value captured is higher than initially anticipated. Aaron Ledet (EVP, Intermediates and Derivatives) explained that the acetyls business is experiencing reliability issues in the syngas unit affecting acid and VAM production at La Porte, but the methanol business is running beyond benchmark rates, benefiting from elevated prices.

Q: Can you help decompose the Americas Olefins margin improvement between cost savings, co-products, and what is structural versus temporary? A: Peter Vanacker (CEO) attributed the improvement to the cash improvement plan, noting a 30% reduction in management structure. Kimberly Foley (EVP, Global Olefins & Polyolefins) highlighted a "perfect alignment" of factors: volumes were up, ethylene and propylene prices were up, while ethane and natural gas costs were down, resulting in a 36% EBITDA margin for the segment.

Q: What is the impact of the Middle East conflict on other parts of the portfolio, such as the propylene chain? A: Kimberly Foley (EVP, Global Olefins & Polyolefins) explained that while LPG exports from the Middle East to Asia have been impacted, US exports have tempered the effect, with operating rates in North and Southeast Asia at about 50%. Peter Vanacker (CEO) added that the portfolio rationalization has moved LYB's polypropylene assets down the cost curve, and the NATPET JV in Saudi Arabia has performed steadily. Aaron Ledet (EVP, I&D) noted that 20% of global methanol capacity is in the Middle East, with significant disruption impacting supply.

Q: Regarding the $250 million negative impact from the Bayport outage, how should we think about the jumping-off point for Q3 in I&D? A: Aaron Ledet (EVP, Intermediates and Derivatives) explained that you cannot simply add the $250 million back, as the company had ramped up its second-quartile POSM unit to compensate. With Bayport back online, they are running the higher-margin PO/TBA unit at full rates and reducing POSM rates. He noted improved volumes in the derivative chain but cautioned that predicting crude oil prices and gas cracks for the quarter is difficult.

Q: Why did you only take operating rates to 90% in Q2, and what is the headwind from lower operating rates in Q3? A: Kimberly Foley (EVP, Global Olefins & Polyolefins) clarified that crackers ran at approximately 95% capacity in Q2, and the 90% segment rate reflects the overall asset base. The sequential decrease to 85% in Q3 is primarily due to planned maintenance turnarounds at the Clinton (70-day outage) and Lake Charles facilities. She noted that inventory was built in Q2 to support customers during these turnarounds.

Q: With the balance sheet improving, is LyondellBasell interested in bolt-on acquisitions? A: Agustin Izquierdo (CFO) stated that the capital allocation strategy remains unchanged, with investment grade being paramount. Priorities include maintenance CapEx, dividends, and growth CapEx. He noted that M&A would be considered opportunistically, but the current priority is to rebuild the balance sheet and improve credit metrics, aiming to build cash back up to the $3.4 billion level held previously.

Q: Do you expect higher prices to be met with higher operating rates in China, and is there a risk of demand destruction? A: Peter Vanacker (CEO) explained that China surprised the market by decoupling chemical production from Middle Eastern oil volatility, using high inventories and increasing coal-to-olefins production. He noted that China's ability to increase exports and reduce apparent consumption is temporary, as inventories have been drawn down by roughly 30%. He sees indications that China is returning to the market as an importer, which could increase pressure on naphtha-based producers to consolidate.

Q: Can you provide details on the feedstock mix flexibility and co-product opportunities? A: Kimberly Foley (EVP, Global Olefins & Polyolefins) explained that in a rising crude environment, co-product credits from propylene, butadiene, and other fuel components increase. The company has added flexibility to its naphtha crackers at Channelview and is optimizing feedstock mix to capture these attractive co-product values.

Q: How did you arrive at the 30% inventory drawdown figure for China, and what is your confidence in it? A: Kimberly Foley (EVP, Global Olefins & Polyolefins) stated that the inventory data is published by the two largest SOEs in the region and is received every two weeks in arrears. The snapshot, taken about a week prior, showed a draw of about 30% from the high coming out of Chinese New Year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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